most americans think obama care needs to be fixed or nicksed. meantime, the president's approval rating has sunk to an all-time low. it's thursday, october 31st, obviously. happy birthday, penelope. "squawk box" begins right now. ♪ did morning, everybody. happy halloween and welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we start things off on this halloween morning with the markets. this month, the dow, the s&p 500, the dow transports the

russell 1,000. the russell 2,000 and the s&p 400 midcaps have all hit all-time highs. ten dow components have set multi year highs in october with seven reaching all-time highs. as for its year in the markets, volatility has fallen almost 18% this month. of course, the lineup has led some to question if things have gone too far too fast. pim pimco's bill gross on cnbc yesterday after the fed decision. >> the markets are bubbling and all asset prices are bubbling down. steve liesman has pointed out profit margins are bubbling. to the extent that any of them can be suspended i guess is the ultimate test in terms of tapering or, you know, the purchases by the fed in terms of adding to the down shape. but, yes, slightly bubbly. >> all right, a little spooky. we'll talk more about his opinions through wrought the

morning. the futures at this point are indicated lower. right now, you see some red arrows there. dow futures down by about 30 points below fair. the s&p futures off by about 2 points. on today's agenda, we have weekly jobless claims coming up at 8:30 eastern. and we have the chicago pmi at 9:45. first time filings for unemployment benefits are seen falling to 335,000. as for earnings, we continue to get the drum beat. we'll hear from exxon, mastercard, cigna, discovery and time warper cable before the bell this morning. andrew, i'll send it over to you. >> thank you, becky. happy halloween. we have a little bit of spooky after the bell session tore shares of facebook. the stock initially jumped more than 16% on better than expected quarterly results. but then this happens. the cfo admitted that there was the truth to some of those concerns facebook is losing its cool factor with teens and the daily activity among younger teens has declined. those comments sent shares significantly lower. also the news about the fact

that they may not be showing as much advertising in the future as people were anticipating. we'll talk about that and a lot more with the facebook analyst at this hour. but that's your exclusive spook on halloween day. in other earnings news after the bell, not so scary results from starbucks. they posted better than expected quarterly results. revenue was in line. the coffee house chain offered a conservative full year earnings forecast that fell below wall street's view. .you can see that stock falling. we'll call that marginal for now. revenues fell just shy in the world aes languagest credit and debit cart candidate. was slightly pessimistic about its outlook in the face of soft consumers. >> the quotes are playing tricks on us. >> again? >> that's okay. so much to talk about. facebook, you saw the quotes. anyway, facebook, in the journal, may not be able to cram more ads into users news feeds. when it went on to twitter today -- >> you had an ad.

>> i haven't seen any -- >> no. on my twitter thing, there are only -- and number one, i don't follow these people. right? >> they just are interloping on my feed. and the screen is two things. it used to be i can see ten things. now they're sticking a big ad -- i'm not following -- that's going to jump the shark for me. >> you didn't like twitter, anyway. >> now there are other reasons to not like it. now there's only two things -- i still haven't seen it. >> you know on your outlook or if it gets messed up, i want to see a subject so i can see a lot at once. >> on twitter you can't delete anything off your feed, can you? >> no, you can. >> he's the man to ask. >> do it quickly because otherwise it will get out into the feed. >> number two -- >> it's an issue of -- anyway. >> we have to run that opening.

>> every hour. >> and the other thing is, there are many times when, you know, we go to washington and we play that pretentious, you know, like network news music and, you know, i'm supposed to be like jeff -- what we did today, i had someone else say that. >> you think this is more us, more our speed, more our style? it's pretty cool. >> always saying the market could dive and this is really good, though. black and white. yeah, that's good. we're going to run that again. i'm on google now. what is this? happy halloween. that's a scary looking witch. i wonder if it does anything. yes. >> is it not the greatest holiday? >> a lot of people think it's, like, some pagan holiday and they don't really like it. >> united states kind of the buzz. >> it's penelope's birthday. which is hard for -- she's always dealing with the kids. we can never really celebrate.

>> i always remember her birthday. >> it's hard to celebrate her birthday. but you know what? beelg born on halloween comes with -- well, great powers has great responsibilities. but she has powers. >> over you. >> over me. i'm be witched, and bewildered. >> i like your orange tie. >> she said it doesn't count because it has blue in it. >> i liked the orange tie he wore the other day. >> this is a halloween tie. you've got nothing. >> i've got nothing. i looked. i looked. >> tonight, you're -- a hat, gas mask. >> walter weiss, we have the hat, the sun glasses, the go tee, yellow hazmat suits, my wife is going to be jessie and we even have zip lock bags of -- >> meth? >> what looks like blue ice or blue sugar or whatever it is. >> i'm not going to say anything

about, you know, halloween in new york, but there's no trees, no grass. do you go in -- say let's go in that building? and you go hall to hall? >> yes, you do. >> door to door in a hallway and knock on the -- what if someone grabs you and pulls you in and you end up on the nightly news, which could happen anytime in new york, anyway. >> dallas door man. >> in your neighborhood. what if he's dressed up like a doorman? >> that would be -- yeah. i'm going to look out for that. >> the whole new york -- but then i hear like in paramus, people go mall halloweening. >> really? >> yeah. >> on our block, things get shut down. you go into all the buildings. everyone tells you who has candy, would doesn't. it's great. >> in our neighborhood, to get to the house next door can take a while, so -- that's not true. let's check on the markets. >> long driveway. >> yes.

are we going way up there? mommy and daddy will just buy us candy. futures are down. we already saw those. they are down at the trick today. check out oil. oil worries me. it's been going down and down and down. i worry about global growth again. i can't wait to have paulson on today. you know why? he's going to be taking a victory lap because of the markets. >> yes, he is. >> but his whole thing about the mismarkets is it's based on economy everyone thought. >> not as -- >> here he is, all his call ves come through, but for all the wrong reasons and for something he may hate. >> he'll be kind of honest. he'll be kind of off. and he always like like he has a -- he's got the scruffy -- >> he can go did on walter weiss, too. >> yeah, without a costume. ten-year fed -- >> our guest host today was wrong and he looks like walter

weis. >> we always stroke him. >> we do. we love him. they're 2.51%. i thought the fed said we're never tapering. other people said, you know, some earth shattering news that they might be data dependent. how many times have we said that? there's the dollar, 1.36. come on. get down below 1.30. soon. and then gold has had some kind of -- once we found out about the central banks, it's done nothing by go up ever since the article about the central bankers starting to hit a shelf in gold. a number of stories out in washington including a new nbc news "wall street journal" poll. hi, aman. you're going to join us with the highlights and then i'm going to ask you some questions, too. that wasn't good for anyone, was it? >> yeah, look, some really bad numbers here. scary numbers, you might say, on

halloween for the white house. take a look at this new "wall street journal" poll released last night. you'll see the president's approval has reached a new low. the president's positive approval is just 42%. disapproval, 51%. not sure, 7% can't make up their minds. that is a bad new for the government. confidence in the new health care law, this is really bad for the president. less confident, 40% of americans now say they are less confidence in the health care law. that is attributable to this botched rollout. it hasn't even captured some of the most recent bad news data that we've had here in the headlines now that we're up to october 31st. also republicans not fairing very well in this at all, either. and this is sort of a hangover here from the government shutdown. view of the republican party very positive, just 6%.

negative and very negative, 23% and 30%. that's a 53% negative rating for the republican party. so it's really a pox on all your houses here in washington, d.c. bad poll numbers for just about everybody. but for the president, this is a bad one, 42% approval. now it's also true that his personal favorbility, that's up and down. that's something that the president has been able to rely on. now we're starting to see that number slipping, as well. and 70% ooh americans say the country is simply on the wrong track. that is a bad number, as well, for any incumbent administration. what this portends going into 2014 is anybody's guess. but it's bad time in the obama white house right now, guys. >> added up somewhat positive, positive and neutral and i got to 46% for the republicans. it's like the election.

here is my question. i'll ask you. you've got your ear -- i kind of wanted to ask harwood, but he's not around. >> fine. >> no, i like you, but with harwood, i kind of nudge him. you've seen the dynamic. >> i'll stay out of that. >> here is the thing. i'm going to paint a scenario and i'm relying on hearsay from ed cline, the author, who said that the white house, valerie jared thought you know what? these republicans are so dumb, but we can trap them and get them to shut down the government. we can use phrases -- she supposed by came up with phrases like hostage taker, gun to your head. we can do all these things, we'll shut it down, it will back fire on them. they'll look stupid and we'll end up winning. now, that strategy worked pretty well, but we've got 42% now on the president's approval rating. >> joe, as far as conspiracy theories go, i'm always more

likely to blame things on incompetent than on actual conspiracies. it takes a whole lost competence to -- >> but the incompeten komcompet from saying it wouldn't shut down on them. all you had to do was give them a little bit of bait to get them to take it. >> and what we see here in this poll, and i don't have these numbers handy, but you do see some negative effect on the president from the government shutdown. it's not as clean cut as the whiteout would like you to say. and the republicans got all the blame. republicans did get the blame, but the president has taken a hit here and it's a pretty significant hit. >> eamon, i don't think that's going to happen, either. >> i don't think it's going to happen, either. >> i want to know whether you think the second temporary of

president obama's presidency he cares. >> you have to care about poll numbers in washington. these guys live and breathe polls. it's like oxygen here. it affects your ability to get stuff done. if people on capitol hill see a weak president, they will pounce. they've been pouncing on him when he's been relatively strong. he started the year with a 52% approval rating. he's gone down ten points just this year. that sa big slide for the president and it's going to be blood in the water for politicians who -- >> it's like lame duckland. and it's going to cause some of those democrats to start to peel away. if the president gets that smell of soot on him, democrats will -- >> what are we going to see him do differently, then? >> that's a totally unknown question. that's the big question going in here. yesterday, you saw the president go up to boston to defend the health care rollout and say, yes, there have been glitches in the website, but no, this is not a bad idea. in fact, it's a good idea.

those people are being told they can't have their own health insurance plan. the president had to go out and defend sebelius and alexander this week. they're circling the wagones and trying to defend themselves. >> and holding off hoping by november 30th they fix this by then, right? >> they have set themselves up. and that's a really good point, becky, because they have set themselves up for another deadline, another countdown clock dynamic where they promise this will be fixed by the end of november. if it isn't, it will be another failure and a lot of people wonder why they would set a hard and fast deadline date like that with an unknown -- >> because if you don't have it fixed by november 30th, then you have a much bigger problem. if people don't have a month to shop for these things. that doesn't change for people whose insurance was canceled.

>> a interview an insurance company yesterday that said his firm had to kick 43,000 people off their plan because they weren't comply kwansant with obama care. he says he has no idea how many of those 40,000 will be able to navigate the website and get new insurance before the end of the year. >> about a month ago, we heard the president's second term was going to be about locking in, that he had to settle for locking in gains from the first quarter, maybe immigration, but nothing huge. this gets harder to defend and just lock in, it's getting hard to do, as health care. >> there's more jobs than they thought. they thought this thing was a done deal. it's becoming a real liability. >> and all that tap dancing yesterday, really, you can sum up what the president has been saying all along. you can keep your plan as long

as it's something that is -- that it adheres to the rules that we're putting forth for obama care. as long as we think it's an okay plan, you're allowed to keep it. you're not smart enough to decide yourself -- >> the crushing sound bite -- >> the -- is that the sound bite ta you think -- >> he said it's about 5% of the american people in the individual market and the subset of that group will be affected by this. they got new plans ever since the law -- >> you need more -- >> but the loophole. they don't feel this is a big rob. but the crushing sound bite for the president is that he said you can keep your plan, period. he didn't say you can keep your plan, comma, but. and that's going to hurt the president's credibility with selling this thing to the american people. >> the person that was

complaining that she had to pay for substance abuse -- post menopausal, you have to pay for pre-natal care? >> that's the point. >> but in the old days, you could get the plan you wanted for 200 bucks. >> but if you want the mass to work, you have to have everybody paying for everything. >> that's the whole theory of insurance to begin with, right? you have to have a whole lot of luc lucky people in the system to pay for those who are unlucky. and you need more lucky people than unlucky. the damage goes to those unlucky folks. that's the basic mathematics of insurance. >> thanks, eamon. coming up, we have a scary story for you fit for halloween. why your spice rack could be contaminated with insects, rodent hairs and other things and that is not just a halloween

story. plus, if you can't tell, we are excited about the holiday here on "squawk box." in the spirit of the season, we've brought in a person to do special pumpkin carving. check in on his work so far. look at that. plus, of course, a big congratulations to the boston red sox. they beat the st. louis 6-1 last night for their third world series crown in ten seasons. this is the cover of the boston globe this morning. the headline, "tested and triumphant." >> i just got one of those twitter ads. it's the first time i've seen one. >> we're back in just a moment with a lot more on squawk.

welcome back. it's time for the executive em. sth a daily segment focused on giving business leaders a leg up. if you are eating breakfast this morning, turn this down for a minute. this story makes me want to puke. the fda says about 12% of spice imports are contaminated with insect parts, whole insects, hairs .other things. it is twice those found in other types of imported foods. the industry's problems are the result of primarily poor storage and processing and not from poor harvesting practices and that's the twist on this story. we had heard some of the

statistics earlier, imported by the "new york times." but this is the fda saying, yeah, this happens and a lot of this stuff is probably coming from the storage facilities, not just from the harvest. >> number one, chopped up insect parts are a fine source of pro teen. there's people that eat insects. >> if you think you're eating insects, it's one thing. >> salmonella is bad. but you can live on insects. it's protein. and -- >> yeah, and if you want to eat bugs, go out and buy bugs. but if i think i'm buying -- >> it's all chopped up. >> -- basil and it turns out -- >> but that's not what they're saying. they're saying everything is chopped up until the gets in it. the rodent hair is bad, but that's protein. you can digest it easy enough. >> salmonella is 7%. that can get you sick. something like 2,000 people report getting sick from spices

every year, but people forget it. united states used in small quantities. it's probably vastly underreported. dan aykroyd on saturday night live, your kids will love this. it's a great source of protein and it's spicy. >> no. you can't -- >> you can't do this. and it's really hard because after that first report, i went out and started looking for spices only made in the united states and it's really hard because a lot of times it says packaged in the united states. >> you've got germs, insects, you've got a problem, right? >> there was a "saturday night live" skit from a long time ago. a guy dice and goes to heaven and he says, what's the 1 shlths 027 grossest thing i ever ate? and it was something like rodent hair examine bugs. >> a lot of stuff ahead of that? >> yeah. a lot of stuff that you don't want to know about. this is not only nasty, but it's making you sick.

>> you don't put that much spice on your food, anyway. >> okay. >> anyway -- >> it's like bed bugs. >> get her going on bed bugs. >> they're everywhere, supposedly. >> did you hear that they're going to become more common than roaches? >> really? >> yeah. >> oh. i have to sleep at home. >> if you want to worry about the new sars virus, it's in bats and they can jump to humans. >> tell us about it on halloween. thank you. >> yeah. i just read it. >> i'm going throw up if we don't change topics. earlier this week, we were joined on set by race car driver danica patrick. to many, she was best known for her go data ads. now it says it isn't bringing sexy back to the super bowl this year. it plans to focus on humor instead. danica patrick will return in the ads for the eighth consecutive year but, guys, what do you think? smart move or not? >> they should be fired

immediately. whatever moronic advertising -- whoever decided to do this has just made the worst decision of their whole career. >> i don't want to sound like a pig, but -- >> this is jcpenney, going -- >> i'm going to let you keep saying this and defend your -- >> i'm done. i'm done. >> you can defend that you want a totally objectification of women and -- 100%. >> on the go daddy ads. >> it has -- >> this is a company that went from $100 million to $1.3 billion doing in you but -- >> i'm not for the objectification itself. >> here we go with the caveats. okay. you just want the sexy ads. >> i'm thinking of myself as a marketer. >> oh, okay. very skillful. >> and clearly it has worked. why would you -- >> now i'm going to say what a big you are. >> enough for the objectification. >> he's a pig. he is. becky, where do you stand?

>> i think that is barofelli, too, wasn't it? >> i think it was barofelli. >> i don't know her, but she's a lovely person. >> do you guys know what go daddy does after all these years of ads? >> that's the problem. nobody knows. they host websites. >> what kind of websites? >> oh, me might host those collections, too. i don't know about that. in that case, i should say just before the closure, because i have a website, that i think is hosted by or at least you buy the domain through go daddy. >> i have to say, i think maybe a switch is a good thing because i honestly couldn't remember. i was sitting there thinking, wa do they do again? i cooperate remember. i remember the ads, but not what they do. >> that's the way it is with a lot of these. >> new york city lawmakers have voted to raise the tobacco purchasing age from 18 to 21. the city council approved a bill that set the minimum $10.50 a

pack price for tobacco sdpretes and stepped up law enforcement. mayor bloomberg is a tough sparter of smoking restrictions and has 30 days to sign the legislation into law. >> i mean only -- i would just say somebody needs to defend the smoker at this point. i would just like to say just outlaw them completely. i don't care if it's 1050. i don't care. it should be at least 21. they have no redeeming social value. people that -- i see people that smoke now and i laugh. i laugh at them. it's like, you know, you just are sick or something in the skull? how can you not -- you don't have kids, you don't care about yourself, you don't care about your future. it's just stupid, right? and you're an addict on top of everything else. >> here is a question for you. i agree with you 100%. but -- >> i said all that with the viewpoint of defending them because they want to do it, but -- >> are you defending them or -- >> yes. >> you're defending them? >> yes. i just look at them and say,

what's wrong with you? but if you want to do it, you're free to do it. >> and you feel fine about paying for their health care later? >> you see, that's where we differ. i don't think everyone else's health care is my responsibility, andrew. i'll take care of myself and my immediate family. that's when you become the nanny state. that's why bloomberg had to decide what kind of drink -- if i have to pay for everyone suddenly, i don't like -- >> it's already this -- you like collectivism. >> the whole world is a -- >> they are a single payer. you don't even know it. >> village idiot. >> knob we're not single payer. we're not. >> oh, oh, my god. >> my camera died and -- >> this is a smoker and he's wearing a grim reaper outfit. i'm not going to say who you are. but, you know, think about it. >> a ski mask. >> great. you're married to a matt. that's a different man. >> if he's like a billionaire

under there, that would be something else. >> that's pretty spooky. >> is this the grim reaper? >> maybe it's kyron. >> who? >> the guy who takes your -- >> the biotech -- >> no, the guy who takes your -- who is the die that takes your coin? >> oh, across the bridge, yeah. >> who takes your -- what do you mean? >> with the three-headed dog. >> no, the guy who takes your -- i thought it was kyron. aim making that up? maybe. >> i don't know anything about technology. i don't care. >> we've got to go. coming up, why investors are spooked by comments made by facebook executives. we have a top analyst joining us next to talk about that. but first, as we head on a break on this special edition of sidewalking dead, joe gets into costume. check this out. >> whew. >> that's pretty good.

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welcome back. facebook is beating the street with its results, but it's scary because the stock losing ground after the company's cfo mentioned concerns about the declining teen usage of the social network. good morning to you. >> good morning, andrew. >> what do you make of this? the numbers seemed good. it just seems like everything else after that went off the rails. >> yeah. there were two kind of surprises in the earn egg call. first, they did warn that there was decreasing engagement amongst some u.s. younger teams and secondly, they said that ad load would be capped. they wanted to keep the number of ads they showed anything new speed cap around current levels. that's what spooked the market. >> so what was the expectation? it seemed like the advertising people was what really spooked

people. maybe i'm wrong. but what was the expectation in terms of what ad load could ultimately look like? >> well, it's uncertain. right now, what the ad load is in that news fooem feed on your mobile device and on your desktop is around 5%. they actually made very similar comments the quarter before, so we didn't interpret this as a new item, new surprise. we want want to step back. this is a company that had a pretty significant pivot over to mobile devices. we feel it hard to believe that they've matured out all the different dials of revenue growth, whether it's reached or frequency or the type of ads. i think that call that they've matured out those drivers is much too early. we continue to like the stock here and as the numbers go up, valuation became a lot more attractive. >> what about the cool factor, though? it's true. and i think i was telling people on this program, maybe a month or two ago, i don't remember

what happened. i had asked everybody in the classroom, i said, how many of you use facebook more today than you used it a year ago and not one hand went up. >> yeah. no, it's an issue. it's hard to stay cool. it's extremely hard to stay cool amongst teenagers. the challenge for facebook is they've got to continually innovate the site and increase the features and functionality of the site to be increasingly relevant to people. we've done our own survey work on this exact issue over the last six months. what we found is that teens, the the majority of them plan to spend the same amount of time on facebook over the time that they spent on the last 12 months because there's a slightly greater cohort that plans to spend less time. they're going to sites like twitter, tumbler and instagram which facebook hedge dollars itself somewhat by acquiring. >> and has the inta gram purchase worked out? when will we know? >> not that we know, no. but what we know about instagram is that it's about 150 million active users now. it's about a tenth the size, eighth the size that of

facebook. it's completely unmonetized. when we think about the stock going forward, there's still two or three very interesting new drivers here. you've got an asset that's completely unmonetized. that's instagram. don't forget the s&p inclusion likely in the next quarter or two. that's one of the reasons we like the stock on this small dip. >> real quick, without cheryl, what happens? there's a lot of talk about she may ultimately go somewhere else. >> well, i think she's been a crucial part of the growth of this company. obviously, not from the engineering side, but she helped bring in that adult supervision. so i think it's a negative if she were to move on. >> what's your price target on the stock? >> $60. it's a sustainable 30% earnings grower. we think the valuation is highly attractive here. >> on a relative val owation, where were you 12 months ago? >> we just came in with a $50 price target and we upgraded this stock at 20 bucks at that time it was a $35 price target.

estimates have gone up. >> nice going, mark. thanks. appreciate it. happy halloween. >> you, as well. sxhoo coming up, a health care ceo speaks out on his business, obama care and much more. the story of net assets, next. the squawking dead will be right back. and now, squawk horror stories from the year 2025. >> the entire burden forces the government to again raise the retirement age. as a result, joe kernen pps his retirement another five years. >> the average cost of a four-year instate tuition at rutgers university rises to $425,000. and kyle is only a sophomore in high school. bill clinton prepares for thanksgiving at the white house, hosted by president al gore. the dinner will be broadcast live in a place of traditional

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no insurance coverage will be able to deny you coverage or drop you as a customer altogether. those days are over, and that's the truth. >> that was president obama speaking on health care yesterday. joining us right now is john bartis, chairman and ceo of net assets. his company released results after the bell, beat the street by a penny a share. thanks for coming in today. >> thank you. >> you have close relationships with hospitals. i think you work with every three out of four hops in the

country. >> yeah. we reduce total cost, enhance operational efficiency, we allow clinical deliveries and then we match revenue and improve revenue against the expected outcome. >> so what does the affordable care act mean to the hospitals that you serve? >> it's a very interesting time. hospital census has been down over the course of the last year. some part due to the uncertainty associated with the affordable care act, but also many people who have high deductible plans are being more prudent as a result of the dollars that they have to cut out of pocket with. so we're seeing utilization change a little bit. >> i think of the hospitals kind of as a place of last resort. i would expect maybe i wouldn't go to my doctor as often if i'm paying a deductible. but if i'm in a hospital, it's usually there because i think i have to be. is that the truth? >> economies are $1 trillion and it's vertical in 5,000 locations. so it's a very big part of the

equation. >> is it a good thing that people are being more concerned before they go in or is it a bad thing because they're not getting the care that they need? >> we're going to find out at the time whether they have pent up demand or whether people are managing their health more efficiently. i think obviously both topic res on the table right now. >> what do you think about what's happened so far? i realize it's still early days and there are a lot of problems out there. >> i think there's a dirchbt difference between the administrative issues that the admin strakz is having and what the intend is. and the intend is to provide coverage for the people that can't get it. we have 40 million people who don't get covered, don't get care. many of them are poor. the only way they can get coverage and care is if they get sick and walk into an emergency room. there aren't doctors that come into the community to care for them. i believe the spirit of the affordable care act is a good thing. however, we have problems. it's 17% to 18% of gt pb.

the next closest western nation is nine. and we have a cost problem. >> meaning we only attacked one side of the problem, which is getting coverage to all the people who are there. skeptics all along said there's no way you can do that without making other people pay for it or bringing down the cost of quality for everything. >> or make it more efficient. i think at the end of the day, the standard of care is going to be more obvious across the country. the truth is, you have 5,000 hospitals, none of whoj know each other's pricing structure. the result is we have 5,000 different hospitals with 2,000 different price books. >> meaning it's impossible for consumers to ever shop around. >> that's exactly right. when we get consumer market baseded approaches and the consume ser driving it and procurement of health care, you're going to get a very smart consumer who today is 79% of the

u.s. economy isn't -- doesn't matter about your education. you have a mobile application, you can find out the prices. >> do these things happen naturally or do you think that the government has to change the way some things are running or is this a situation where if the consumer is paying more for it, market forces take over? >> it's a great question. the question in my view is the affordable care act because it will be consumers buying. buying policies and pricing health care. that's never happened before. most of us have gotten our health care through private insurance through our workplace. as a result, it's an industrial price. we don't have the ability to go to any provider ahead of time and know that price or know the outcome. ultimately, we have 25,000 health care. they're going to be purchasing their health care.

while putting it people into exchanges. >> and that's been the question all along, the idea that will consumers pay for this? it's an unknown amount every year. it's been growing at a rate far faster than most corporate revenues and earnings. at some point if time, they cross and corporations might have to make tough decisions. >> thanks for coming in today. >> thank you, becky. at the top of the hour, we're going to be joined by cleveland clinic's ceo dr. toby cosgrove. plus we'll check in on our squawk pumpkin carver. look at what he's doing. it's quite remarkable. we'll talk to him about his work and maybe a few special requests. now we've seen joe, now

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spending your halloween festivities reaching nearly $7 billion. hudson valley commemorates the mega holiday with the annual blaze. that's a walk through experience

with 5,000 hand-carved jack o lanterns illuminating the way. joining us now, creative director at historic hudson valley, he's also hand carved some pumpkins of becky, andrew and me. do you ever say and i? i would never say and i unless i was -- >> and i am going to the store -- then you would say -- >> but i'm not. the carved pumpkin of me. that is amazing. >> amazing. >> way to go. >> how did you make me look 60 accurately? and everybody else looks -- although, becky -- you look -- a little walking dead-ish. andrew looks perfect. >> thank you. >> now, if i bring these home, what's with the squirrels, man? >> the seeds. >> it's the seeds? >> those little -- >> scoop the seeds out and you can spray it with some kind of deterrent. >> i catch them, and i come home

and they're in there. >> have you ever been there? it's phenomenal. the blaze is completely -- >> 5,000 jack-o-lanterns. >> we've been and i didn't -- it's an amazing, amazing place. kids get blown away. >> i want to know, a, how you got into this, and, b, if there's any way our kids can actually try to carve things even row motely liremotely like? >> yes, they can. and i was working at historic hudson valley as a tour guide. and about ten years ago, they decided to start a fundraiser based around the idea of 5,000 jack-o-lanterns and enlisted me knowing i had an art background. >> you don't carve all of them, do you? >> no, we have a team of at least 20 strong carvers, we have thousands of volunteers who help scoop out. >> you had a sculpting instrument. he's not using a big michael myers knife. >> is that the issue? is everybody doing it wrong? >> yeah. >> no -- >> most people go all the way

in. >> right, so we just did it over the weekend and we went right in, all the way, too much, but not like -- the beautiful stuff you did, you have to -- >> thank you. it depends upon what effect you want. if you want the classic glowy triangle eyes. >> where did you get a pumpkin? >> remember, i told you -- >> oh, you had to leave the city. >> well, yes. >> oh, my god. >> we got the pumpkin two weekends ago. >> outside of the actual island of manhattan itself? >> we went on another island called long island. >> pumpkin carving, it's a real, i think it must be over the last decade. it's a real career now, right? >> it is. >> i've seen cooking shows. i didn't realize you'd been on the cooking show. this is -- what happened? how did it become an industry? >> it's just a phenomenon. i don't know. it's the second largest holiday. it's -- >> it's right next to christmas.

it just keeps growing exponentially. i can't complain. >> and it's a good flavor. pumpkin pie is great. >> it is. >> and you know what else is good? >> starbucks. its pumpkin drink. >> i was going to mention dunkin donuts. but this is a microcosm of our life. pumpkin flavored munch kins. my daughter's favorite. what do you have at starbucks? >> pumpkin lattes. whatever it is, it's fantastic. i don't know what it is. >> all right. >> it's a sculpting thing. you don't go all the way in. i'd love to see you -- didn't it get messy? we take out the $5 million apartment. >> oh, man. >> who cleaned it up? did you have a crew come in? >> a butler. >> michael's going to with us for the rest of the program. he'll have another pumpkin debut later. october is traditionally a spooky month for investors, not this year, the dow and s&p on

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darkness falls across the land. "squawk's" second hour is close at hand. creatures crawl in in search of stocks to make money and avoid the sharks. and who soever shall be found without the soul getting down must stand and face the anchors of hell and rot inside a corpse's shell. the foul stench is in the air, so watch "squawk box" if you dare. grisly cools from every tomb are

suggesting stocks to protect your doom. for no mere mortal can resist the second hour of this "squawk box" thriller. ♪ good morning, and welcome back to the "squawking dead" on cnbc this morning. i am andrew ross sorkin. and check out the futures this morning. happy halloween, everybody. we don't have green arrows, though at the moment. let's flip that board around so you can see what's going on with the futures. we do have red arrows. not so scary, at least not

scary -- not too scary yet. s&p 500 off about two points and the nasdaq off about little over a point. headlines for you this morning. some scary some not so scary. spooky news on facebook. watching shares of facebook today. those shares are under some pressure. the social networking giant beat estimates with the latest earnings last night, but the company talked about signs that younger teens aren't using facebook as much. and we'll have much more on facebook's results later this hour. also, on our watch list today, starbucks, its fourth quarter profit was 63 cents per share beat consensus by 3 cents. but the coffee chain also cut its 2014 profit forecast below estimates. speaking of coffee, mcdonald's is expanding its presence in the coffee market. company plans to test a market package ground and whole bean coffee at supermarkets in other outlets starting in 2014.

also test single cup servings. joe has a little sports news on halloween. >> i do. how times have changed for the boston red sox. although they look like turn of the century team whose last championship in the 20th century occurred in 1918. >> were those costumes they wear? >> with the beard? >> the beards. >> no, those are real. but that is an amazing fact, andrew. i remember the curse of the bambino. i think they won four, but then the next one wasn't until after 2000. but now they win a lot. the sox having a much better century this time around beating the st. louis cardinals 6-1 in the world series. it was the third championship in ten years and david ortiz, i don't know if he ever made that, he was the series' most valuable player. he's not just a guy that is so specialized all he can do is hit. he made good plays. john lackey picked up the win

for the red sox. a second time in his career he's won the clinching game of the world series, he did the same as a rookie for the anaheim angels back in 2002. and what strikes me every single time, i watched the cardinals score runs against my cincinnati reds as if they were -- they were inflationary. i thought they were going to be worth less than a run was worth. they would score eight, nine, ten, seven, six, eight. you get in the world series, it's either the pitching that makes a difference. >> pitching? >> or the pressure or something. but the pressure didn't hit david ortiz. i watched the beginning of the game last night. didn't matter where it was. he was so zoned in to where the pitchers were. but my only hope is that -- and i'm, you know, god bless the red sox, i was worried if they won that everybody would start thinking if we grow a beard, we can win the world series i think

it would be too patently imitating. i don't know, maybe it won't cause everyone to grow those stupid beards, will it? maybe it'll be over now. if they lost -- >> it's not going to be over for them. >> they're going to still wear those? >> it worked. >> are you sure it worked? that's like the budweiser commercial. he eats a veggie burger at a football game -- >> don't question it. it's only crazy if it doesn't work. >> i know. i know. we're stuck with the beards. >> i think they're here to stay. >> we should've gotten. >> we condition do it. a cat can -- a cat can lick off my beard half the time. at my age, too. i don't know if it means i have a lot of testosterone or not a lot. i'd rather have the hair here. and i do see guys at the gym and i look at them and it's frightening to me. i do, i have to avert my gaze. have you seen the hairy guys i'm

talking about? let's go. it looks like a halloween costume. they look simian. if i was heard to them, i would have a separate bedroom, i would. >> speaking of health care. >> let's talk about health and human services secretary kathleen sebelius. check out this exchange with congresswoman marcia blackburn. >> i'm not pointing fingers at verizon, i'm trying to explain the way the site operates. we own the site. the site has had serious problems. >> who is in charge, madame secretary? >> the person now in charge as an integrator is qssi. >> who was in charge as it was being built? >> was in charge, up till -- >> at that team, who is the individual? >> michelle snyder. >> michelle snyder is the one responsible for this debacle. >> well -- excuse me, congresswoman, michelle snyder is not responsible for the debacle. hold me accountable for the

debacle, i'm responsible. >> okay. >> joining us with more on the -- from obama care is toby cosgrove. it's great to see you, thank you for being here. we know this is a massive undertaking. and i wonder what you're thinking at this point. are you surprised by the problems that have come up? or did you expect it? >> well, first of all, happy halloween. >> you too. >> it's disappointing we're having so many problems getting this organized. but it really has not had major effect. and if they can get the problems cleared up by the end of the year, hopefully we'll go forward with the program. >> your point all along has been this is an industry that has been under massive change and more change is required. wipe don't you tell us a little bit about what you think needs to happen over the next couple of years. >> well, we know we have to take the costs out of the system and that's what's happening right now and it's happening across the entire industry. if you look at it, this is a huge change for the united

states. this probably is as big a social change as happened since the new deal came along because it affects 100% of the people in the united states and their health care and the cost of that. and if, in fact, we don't take costs out of the health care system, it's going to begin to affect other things like education and other social programs. so there really is tremendous pressure to have change and it's coming in all directions and it's going to affect every aspect of the health care delivery system. hospitals, doctors, manufacturers, et cetera. >> we had a guest who works with hospitals in the last hour who talked a little bit about how they have actually seen usage drop, and he thinks that may be in part because people have higher costs they have to pay when they come. they're taking on more personal responsibility. i'm trying to figure out if that's a good thing or a bad thing. part of it may be people being more conscientious as shoppers. but then you have the question of are people not coming in because they can't afford it and they're not going to get care they need. what do you think? >> well, we have seen decreases

across the united states and hospital utilization. no question about that. most people think it's because of the copays and because of the large deductibles that people have in their insurance. that is -- the general consensus of what is causing these changes. whether this is going to affect people's care ultimately is hard to say. >> but you sound like you think maybe not. we all got a little hypo in us, don't we, toby? >> hypochondriac. >> if you have a deductible, you can't cure a cold, i don't think, unless the cleveland clinic's got new data. and don't you think that we err on the side of going too quickly if there's no deductible? >> well, i think it depends on what aspect of society you're at. if, you are, in fact, in a restricted income, you might defer going to see a physician when you actually should. on the other hand, some people overuse it.

and so i think that on the la e large -- large outlook, it is probably a good thing to have a deductible. >> can you do -- is part of the answer a really good website that can answer some simple questions for you about whether you need to see someone? >> and increasingly, we're doing just that. we have a website called itriage. >> wuonce you know, that's 90%. it's when you're scared about something. >> i called the doctor this past weekend to find out if i should bring my son in. if you can get someone on the phone. it helps. >> and we have a nurse on call and take about 200,000 calls a year. so if your child gets sick in the middle of the night, you can call up and get the advice from a nurse and she has a protocol to direct you. >> toby, if you had to say how you're feeling right now, are you optimistic? are you concerned? where do you think we're headed just with health care in this country over the next two years

let's say? >> well, i think this is an experiment we've never done before. so, unfortunately, i don't think we can say how this is going to turn out. i'm sure that in the 2,700 pages of legislation, there are impfgss that are going to be changed over time. there are also 27,000 pages of interpretation of this. we have to see how this is going to -- we're obviously going to get unintended consequences and we'll have to see how these turn out and i'm sure the law is going to continue to be refined for the next four to five years just as head carry was. >> it's great having you here. you're on the front lines and we really appreciate your time to keep us up to date on what's happening. i hope you'll come back again soon. >> thank you, becky. >> thank you. coming up next, we'll talk about avoiding the armageddon ghost. we'll be hearing from two market experts on what may be spooking this market and how you can protect your portfolio from zombies. we're back in a moment with that and a lot more.

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on this, right? >> was that great? >> it was reality. >> reality, right? >> but there's a little thing -- >> i've got some lines too. >> but he got the split in my teeth, man. >> you sound like the dude. man. >> it's amazing. >> and they got your forehead. >> and my neck. thanks a lot. all right. markets -- >> i'm very happy with my pumpkin. >> you look young, but you look a little bit -- >> weathered? >> drawn a little bit. >> i think it's hard not to look weathered on a pumpkin. >> and you're up early. you're up early. i think the eyebrows he gave you a break on. those could have been even -- >> more pronounced. >> he didn't do a caricature version. >> look at my wrinkly forehead too. maybe -- i'm going to get some botox and then he can do it again. maybe he can redo it, although i don't like needles. >> no. >> how does a needle in your

forehead sound to start the day? >> loaded with botulism? >> yeah. losing ground on wednesday the s&p 500 snapping its four-day winning streak. here with us now, jim paulson, chief investment strategist at wells capital management who we -- we already alluded to you earlier and we didn't see it. you're not prepared for the onslaught. and his global market strategist at jpmorgan funds. here's what i said, jim. over the years as the market used to fluctuate and go down once in a while, you'd come in sometimes, it'd be down and i'd say, you know, you're not feeling like your predictions are working other times i'd say, wow, take a victory lap, no one can say you were not right about being long the market. and i hope your bosses appreciate you. hope your investors appreciate you kept them long and made them a lot of money. but all along for a year or two, it's been about that we have underestimated the underlying strength of the economy.

and that the hangover and the fear from the financial crisis has caused people to be -- to underestimate what was really happening. and now, the reason that the fed is all in and will be all in this year and we don't know next year. the reason is that never really came true. the market's been up, you were right on that, but did you get lucky? the economy has not been strong like you thought. >> welm, i think the thing that's been driving the markets throughout this recovery, joe -- >> is not the fed? >> i don't think so. i really don't think so. >> you don't like the fed, you wish they'd get the hell out of the way. they've made your three-year period and you still don't like them. >> i don't think it's i don't like them, i don't think they're as relevant as we give them credit for. they're not as important. >> is this just so you can -- >> no, i think the thing people are missing, it's not so much earnings driven, this market, particularly last year. this thing has been driven from the get go by confidence. we destroyed confidence, took it

down to postwar lows for three years. all we did in that period was worry about the armageddon ghost around every corner. and as a result, that perception priced securities across the spectrum of the financial markets. this market this year is really about a move up in confidence. we've got from post war lows to five-year highs in confidence. and when that happened, i think it was because we gave up the armageddon ghost. we no longer freeze up. >> good halloween talk. you're nodding. >> no, i think i agree for the most part. we had a government shutdown. we almost went bankrupt on our treasuries for the second time 2011, we had this. >> overstating the whole situation. >> it sounds crazy, but if you put it in that -- >> we were never going to -- >> but we got close to. >> almost is -- >> that destroyed a little bit of confidence as you were saying. had the economy growing at 2%,

right. so i think it is fairly resilient and we didn't get in our way, we would've actually been growing a little bit faster. >> do you think we will eventually? seems to think that pimco. we need to talk about bill gross. pimco -- they said five years ago it was going to be 2%. came out with 2% for 20 years. aging demo, you think we're getting the 3 to 3 1/2 again? >> i think structurally the economy is not going to grow as fast as it used to. but there's also a cyclical recovery that has been delayed. and for that reason, it shouldn't be that crazy to think that we could grow 2.5% to 3% next year. >> the third recovery in a row that's been delayed. early '90s, early 2000s, this one we're delayed for years and finally geared. and this one is following the same pattern. i think we're going to 3% growth next year and we'll hover around three for the rest of the recovery.

>> the taper's not going to be a speed bump if and when it comes? >> no, we challenged that, andrew, couple of months ago. the market was going higher. i don't think the market's scared about taper. >> i do think the market short-term won't like it. you look at may and then eventually say it's okay. but i'm more concerned of the effects on currencies and the emerging markets more so than europe and here in the united states. >> a real slowdown. and if there's a real slowdown there, there's a real slowdown here. >> more global syncniization. who cares about the fed or fiscal cliff. >> you saw what happened in the emerging markets the second there was talk of tapering. forget what happened here. >> outperforming the united states market for the last three to four months. >> since the idea of tapering

has been delayed. >> right. so the second you put that back on the table. i don't know. >> how much gas. let's say -- i think maybe the stock market's discounting a 3% economy. how much gas is left as -- does it stop going up when we get there? >> i think that's another -- as i talked about the stages of conference, joe, we are about middle of the line in terms of confidence range historically. >> all right. 1,763. one more notch up. before we go down 20% in a bear market, what's the ultimate number we could hit? i used your ultimate. at the end of the day? >> next year we go up to 3% and that's going to take us another stage up. >> 1,900 on the s&p? >> stall speed. that'll make the valuations even go up more. >> and we go into a cyclical bear market? >> well, i think this market is eventually going to get up to 20 times earnings or better. >> where -- >> not necessarily next year. next year i don't have an official target. >> that'll be 2,000 on the s&p. >> i think we're going to run

off that level. >> 10% is different than 20%. >> yes. >> a bear market. that's just -- >> yeah, i think we're going to have -- i think this is probably inflation stage under control. we're in the midst of a buy and hold. buy and hold stock market. >> you could see 2,000 on the s&p? >> yeah, i try not to think about the levels because they scare you. but 5%, 6%, you tack on a dividend of 2%, you could see 8% for the next couple of years if you don't have a recession, which is our camp, we see a recession. that would take you above 2,000. >> would you thank our guests, this gentleman right here with his full name? >> no, i will just -- >> come on. >> the whole thing. >> andre garcia -- >> it's a variant of my name. >> it is. >> would you thank him. >> thank you so much for being here. i really appreciate it. >> who is he? >> i have no idea, but you're wonderful. >> we went to high school together. >> i know, i just -- >> honestly?

>> scarsdale, right? >> is everyone on a diet? >> oh because of the diet? you never heard of the scarsdale diet? >> the guy's dead. >> yeah, yeah. >> be grateful you have to eat grapefruits. anyway, thank you for being here. >> his girlfriend -- >> was it the girlfriend or the wife? >> i know exactly where the house is and the road. across from the soccer field. anyway, we've got to go pay some bills on this spooky day. coming up, could the intrigue over facebook be dying off among teens. earnings from the social media giant were good and the stock soared until the cfo mentioned decreased use by younger teens. we're going to talk to an analyst about those comments and what it means for the investor. and then earnings from marriott out after the bell. last night, company's ceo -- what? sorenson, what about him? >> no, i was waiting. >> he's going to join us first

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take a look. here is the "squawk" pumpkin carver today. michael is here, these been carving along the way. this is -- was that liesman? >> yeah, you see liesman right there. >> oh, you didn't look. because it's so unbelievable. >> get a closer look. >> look at that. that's exactly -- >> isn't that awesome. >> that is amazing. he's doing an excellent job. by the way, he's surrounded by our hair and make-up artists who are in costume today, as well. >> in tennis outfits. >> could be ed asner. up next, we'll take a closer look at facebook, their earnings plus the ceo of marriott. they'll be joining us, as well. take a look at the futures this morning. down by only about 21 points below fair value for the dow. over the next 40 years the united states population is going to grow by over 90 million people, and almost all that growth is going to be in cities. what's the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity?

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just the music. >> it's perfect. >> the music makes me excited about -- >> i know. me too. it's not coming on. unfortunately, "squawk box" is coming on. >> that's good too. >> yeah. welcome back to "squawk box." we are going to talk about the earnings across the tape. cigthat earning $1.35 a share. cigna said it had strong performance in all of the business segments. time warner cable earned $1.69 a share for the third quarter, 4 cents above estimates. it's been hurt by increased programming fees. and shares of avon products taking a hit in the premarket trading. avon earning 14 cents a share for the third quarter. that was 5 cents short of estimates. with the ceo saying that the

quarter was tough. they were hurt by continued weakness in some of the company's north american businesses as well as macro economic head winds. facebook suffering from teenage angst. more teens are dropping the social network. joining us now with reaction is tom forte. managing director at the advisory group. good morning to you. >> good morning. >> the numbers were good, but seems like the teens are tuning out. what do you think? >> the numbers were fantastic. and if you looked at the after hours trade, there were two things that happened that brought the stock back to even. first the disclosure, they had a decrease of teens on a sequential basis and the second being they're not going to increase the mix of ads placed in news feed. >> we talked to analysts in the last hour that ads in the news feed issue was something that shouldn't be as big of a deal as it's being made out to be. for you, was that the turning point? or was it the comment about teen

usage? >> i think the comment on the ad inventory was more significant of the two. i'm highly confident they can either make an acquisition and continue to get teens coming to their portfolio services or they could tweak their core product. >> and so your expectation, though, had been that they were going to be placing -- right now, placing about 5% of the posts within your newsfeed are ads. your expectation that would've gone up to what? >> well, i think that the way i look at it now is that quote, unquote low-hanging fruit's been plucked but they have two levers to pull as far as increasing pricing on that advertisement or those advertisements. and the second, driving more engagement. so they have 5% of a bigger number. so more inventory in that way. >> and you just said that you have -- you're not worried about the teenage usage because they can always make an acquisition. doesn't that suggest to you that's an organic problem? >> no, i think you have to look at the history of social

networks. kind of from tripod forward. and why does facebook have staying power? >> you just talked about tripod. if i think about tripod and geocities and friendster. and you know how they all ended, right? >> why are they gone and facebook still here? the point i'm trying to make. they continue to innovate. they add time line, they add newsfeed, messenger, home, graph search. i think that innovation is what keeps people coming back to the service and growing the service and that will ultimately help them bring the young teens back. >> we're going to have the twitter ipo next week. when you look at facebook versus twitter these days. twitter, who is the winner in that competition? >> twitter has the advantage of coming public at a time when they have significant opportunity to expand their audience and improve their monetization. when facebook became public, it was about improving monetization. the way i'm thinking about the twitter ipo, 38% of their users

from overseas but only 25% of their revenue from overseas. so if they can get that working much like mobile monetization like facebook, that'll be a winner of a stock. >> real quick, tom, what's your price target on facebook? >> $60. >> thank you for joining us this morning. happy halloween. >> you too. and coming up, those who choose not to book the overlook hotel are looking to marriott for a good night's rest. the company reporting quarterly results that beat estimates thanks to higher occupancy rates. ceo arne sorenson joins us right after the break. here's arne. "the squawking dead" is back after a break.

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to build more bright minds. invested in the world. bny mellon. we're checking futures right now, take a look right now, we have some red arrows, not too spooky just yet on this halloween day. dow jones looks like it would off about 16 points, nasdaq up a little over a point and a half and the s&p 500 we'll say it's off marginally. joe? marriott released third quarter results after the bell yesterday reporting an 18% increase in earnings per share over a year ago. joining us now is arne sorenson.

good to see you. we have been checking in with you off and on for checking in. i came up with that all by myself. off and on for the past six years and you hit a six-year high in terms of worldwide occupancy. and we're seeing rev par continue to go up. and i can't remember the thing wasn't going up was pricing in the average daily rate. is that back yet to where it was before the crisis? >> well, we'll end the year with rev par sort of back nominally to the 2007 level. so essentially all-time highs. i want to say happy halloween to all of you. i saw the teaser on the way in. just to be clear, we've got almost 4,000 hotels and i've not heard a single one of them, there's a rumor, that any of them are haunted. >> you know what, you brought this up. i was going to avoid that, but i actually thought about asking you, do you know whether you've had horrific ghoulish murders committed on any of your properties? >> not that i know of. >> all right.

and you know what, i don't think you know whether none of them are haunted to be honest with you. you haven't had everyone tested, have you? >> we think many of our competitors' hotels are. >> good answer. >> and dangerous. strange smells, you find in some of those other hotels. remember for a while, arne, that rev par was okay but pricing was still down. is pricing back to where it was? >> pricing has moved nicely this year. what we've seen is occupancy has built back to essentially peak levels. and so we're full midweek. and we've seen that we've been able to both raise like for like pricing, but also shift towards higher rated business. so i think one of the things that's helped us on the weak government pieces is an example in a lot of higher end hotels, the government has been yielded out. >> you're at 144,000 pipeline rooms. 144,000 rooms around the world. i'm sure they're everywhere. is there a concentration that

would illuminate what your strategy is? >> we're at 50%, a little over 50% of all the rooms in the pipeline are overseas. china continues to perk along well. we've talked about this before. we've been dominant in markets like shanghai and beijing in china. i opened our 22nd hotel in china, for example, earlier this year. but we've been relatively late to the party in the secondary cities. some of those marketsme. and we're now opening in those markets. great growth in that market. india's going well for us too although it's complicated at the moment. >> complicated why? >> yeah. >> well, the economy's topsy turvy. and so while they need more hotel rooms, it's a tough financing market for our hotel owners. >> and average of these are middle market? is there a lot of ritz carltons? high end, low end? what is it? >> it's across the board. so in bangalore this year, we'll

open a ritz carlton, a marriott and a fairfield, first ever in india. we decided we'd do a mid market product because that was a big gap in that market for particularly the indian travelers. >> what have you done with health care and obama care? where are you? do you -- have you made any hiring decisions based on avoiding covering people? are you thinking about how marriott's long-term -- you know, what kind of benefit you're going to offer five years from now. how does it all play out with a guy like you? >> well, i'll frustrate you the way i seem to be frustrated every month we got together to talk about this. the employer mandate doesn't kick in until the first of 15 now. we've made no decisions about hiring which are impacted by obama care. we obviously are keen to be a great employer and want to do right by our associates and make sure that we are being fair and taking care of them.

we're also watching this to see what happens as obama care rolls out, what happens to pricing for our employer provided program. we'd like very much to continue to provide a strong employer program because we think it's better for our associates long-term. and therefore, we'll reduce turnover and be good for us. >> arne, this is jim paulson. i was curious about, you know, so much of the crisis took out business travel dramatically. and i'm wondering like conferences and all that. from a company standpoint, if they come back, can you see that in the hotel? >> some of the best news in this quarter has been that we've seen group bookings, for example, for next year up 14% from where they were a quarter ago for 13. so that's a good sign. but you're right to ask the question because group tends to lag usually in economic recoveries. it's probably lagged a little

bit here. we see that the smaller group higher end incentive group is probably better. the huge group, the 1,000 plus rooms, associations think the american medical association, the american dental association, some of those things, they're coming back, but probably not as robust as they were in 2005, '06 and '07. maybe the meetings weren't quite as long, we're seeing that build, which is a positive line. >> where are you getting margin these days? >> you think the margin would be at the most upscale hotels. but, in fact, often times it's the case that it's the opposite. >> yeah, we've -- we've seen for our managed hotels that the profit margins are up about a point to a point and a half this quarter. we're focused on every single line item of expense in the hotel. we still drive incremental improvement from procurement. we are being aided this year in energy which is helpful in many markets, energy is cheaper than

it was a year ago. and we're doing everything we can to just manage expenses. we're back to -- we're still really not back to the same margins we had in 2007. so we've got another year or maybe two to get back to the same level. and that's going to depend mostly on revenue. >> is it the case that the highest margins would be at a place like the ritz? or is it the case that the courtyard does better? >> well, when you compare it to prior peak in 2007, we see that ritz still probably lags a little bit. it's been growing faster the last couple of years. it's not the same level it was at before. >> all that service costs something. >> arne and had this conversation about wi-fi before. i don't need to ask him -- >> don't ask him. >> he hasn't done it yet. free wi-fi. give away the wi-fi, i don't know why you're charging hemoall this extra money. >> i hope you're carrying a

golden platinum card, it's free to you. we'd love to have you come stay with us. >> golden platinum card, which golden platinum card. >> rewards. >> i'm going to have to. >> give him your address. >> i'll send you one. >> no, i don't want to take anything as a journalist. >> yeah, he would never. >> i'll call the number if i'm a good customer, i'll get the free wi-fi. >> arne, i like some of the stuff about washington, because you're making a pitch like one of our pitches, which is rise above and win us back and start acting like adults down there. but you say our political leaders need to take a cue from america how america does business where you can use disagreements that can be sharpened and used as a tool for making better decisions as long as people like and respect each other. that's the problem. >> that is the problem. and, you know, this has been frustrating. we've got a recovery which is broad. it's across the united states, i think increasingly we're seeing signs of optimism in places like

europe. and the biggest threat to that recovery is this uncertainty that continues to pop up from the u.s. government. and for goodness sakes, we've got to make sure we don't find ourselves in the same situation in january or february or they'll pull back the economy again. >> yeah. but that is a problem. and i am blaming both sides about not liking and not respecting each other. neither side i think at this point, it's just -- it's clear. and i'm not single anyone out, but it's certainly not one side or the other that disdains and seems to, you know, really -- it's deplorable. anyway, arne sorenson, thank you. how many hotels do you have? >> almost 3,900. >> see there's no way you know none of those are haunted. there's no way. there's no way. you haven't tested them all, have you? >> i have not. all i'm doing is listening carefully. >> all right. i would venture to say, what do you think, becky, 5%, 10% could have that spirit there?

unsettled? >> no. no, you're thinking -- >> 15%? >> no -- >> a fancy hotel. >> he could be casper. >> no. >> thank you. we appreciate it. we'll check back in. we're going to get above the average. all that -- we still go back to 2007 on certain things, which is to your point. we're still not totally healed. >> certainly consumer confidence isn't. >> all right. when we come back, $1 million home on elm street, but it is not freddy kruger's. real estate broker to the stars joins us with million dollar homes in some pretty scary places. indian burial grounds anyone? and now "squawk horror stories." from the year 2025. >> the supreme court hands down a ground breaking ruling on verbal political workplace arguments in the case of sorkin v. kernan. >> bill clinton prepares for

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welcome back to "squawk box" on this halloween day. in the spirit of halloween, cnbc's popular million dollar homes franchise scaring up houses worth $1 million in america's spookiest neighborhoods. all towns have a haunted past or ties to famous horror flicks. we sent out seven reporters to these mysterious real estate markets to give you tour of million dollar homes. all throughout the day, these homes are going to fight to the death to advance. but to make it more suspenseful, we've asked our ghouls and goblins not to say where their homes are located. you may be able to guess using our clever clues or may be shocked when we reveal where they are. now touring the homes in round one are josh lipton and mary "tombstone" thompson. take a look. >> this house is no nightmare though it does sit on elm street built in 2001. this family-friendly home on 1/4 of an acre, oversized mud room

with lockers and laundry. outside, gorgeous gardens and mature oaks complete the landscape. >> if you aren't spooked by the state's ties to the spine-chilling horror stories, you'll probably fall in love with this brick colonial, 110 years old, sits on a corner lot a little over a tenth of an acre and beautifully landscaped. >> this 3,800-square-foot home boasts a wide open floor plan. the kitchen features custom cherry cabinets and a granite island and floor to ceiling windows in the breakfast nook let in a ton of natural light. >> behind the mansion's stain glass windows, there's over 4,200 square feet of living space, original woodwork, and full fireplaces. the stainless steel appliances and six-burner stove. >> this house has five bedrooms and 3 1/2 bathrooms, a spacious master suite with a sitting radio m and master bath with its own whirlpool tub. there's a huge walk-in closet

with a built in ironing station. >> this has five bedrooms and 2 1/2 baths. up a flight, there's expansion potential in a sun-filled attic with exposed brick. >> work from home in this custom office featuring a built-in wrap around desk and when work is over, the finished basement boasts a wet bar and guest bedroom and bathroom. the asking price $998,900. >> nothing spooky in this basement with the original billiard room. next door, there's a children's sand box. it's a great spot for entertaining and all of this and the house's historic charm can be yours for $1,050,000. >> okay, help us figure out the locations of the homes, we have a couple more clues for you. for the spooky splendor, the home located on hem street. paying homage to the movie nightmare on elm street, known

more for the mobsters than ghosts. you could think about chicago, you could think about the sparanospra sopranos. joining us now to talk about all of this is the broker to the super rich. she's going to be telling us if we were right and which home is the better bang for your buck. >> and you? >> i don't even know. >> you had to go to amnityville. >> what's the town that friday the 13th. >> no, it's haddenfield. >> yeah, there's a new jersey. >> these are all great guesses. i wouldn't even have come up with those. those are all really good. >> tell us where we are. >> well, the midwest, bing bing, is glenn ellen, illinois, outside of chicago, and it's a beautiful as you could see

10-year-old house. and it is better known for its mobste mobsters, right, outside of chicago, than ghosts, but it's on elm street and therefore, that's where we come up with the ghoulish story behind it. >> where is monsters marvel? >> portland, maine. >> i wondered. >> exactly, all about steven king, all about the "it" book. >> which one wins? >> okay. we have 1/10 of an acre in portland, maine. it's oversized. it's undersized lot for the house. i think in portland. so i'm looking at that house as a tough sell, it's 110 years old, only 2 1/2 baths, people really like baths today. so, unfortunately, monstrous marvel loses, which means spooky splendor wins. >> thank you for this. we're going to be doing this all day. >> yeah. >> million dollar spooky splendor survives round one.

let us know if you agree. tweet us usin using #milliondollarhome. see how the next round unfolds and later she'll be crowning the top house during "closing bell." coming up, we'll talk to activist investors on the defense. peter weinberg. they're going to join us for the remainder of this halloween special "squawk box." coming right back. mine was earned orbiting the moon in 1971.

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oh, mr. turtle. ahead on the "squawk" ceo call, the company that specializes in information solutions for the government including cyber security intelligence and health care. and breaking economic data, we've got weekly jobless claims hitting the tape at 8:30 a.m. eastern. the third hour of the "squawking dead" starts right now.

i don't think "squawking dead" is taken. we should just change it. try to get some of those numbers. 18 million whatever? >> a lot. >> welcome back to the "squawking dead." i'm going to go with it here on cnbc. hail halloween, i'm joe kernan along with becky quick and andrew ross sorkin. more from jim still ahead. first, though, andrew has your morning headlines. we've got some morning headlines including corporate news. little by scary. crazy after the bell session shares for facebook. the stock initially jumped more than 16% on better than expected

quarterly results. but then cfo david ebersman, some truth to the concerns facebook is losing its cool factor with the teenagers. and that daily activity among younger teens has now declined. those comments sent shares significantly lower. also the fact they will cap the number of ads they're putting in their news feed. something some analysts were not expecting. >> sent the shares lower from where they were initially. >> correct. >> shares are still higher. they've been higher all morning. >> can i tell you quickly? exxon mobile, looks like the company came in with earnings of $1.79. the estimate for $1.77. third quarter annual earnings, 7.9. third quarter earnings, 7.9 billion. down 18% from the third quarter of 2012. they say production of oil increased from a year earlier. significant weaker refining margins as a result of increased capacity negatively impacted the downstream markets.

>> people have been short. >> well, he's been back a lot of -- >> because of the refining. >> a lot of the big majors. expenditures, capex and exploration expenditures, $10.5 billion in the third quarter, $32.6 billion for the first nine months of 2013. that was in line with the spending plans, part of the reason he was short, too. they'd been cutting back on some of the capex and that was why he was looking at a lot of these. >> anyway, that stock barely budging right now. >> we also have a little bit of earnings news from after the bell. starbucks posting better than expected quarterly profits. the coffee house chain offered a conservative full-year earnings forecast that fell below wall street's view and we'll be watching shares of visa this morning. revenue, though, they did fall just shy. and the world's largest credit and debit card company was slightly pessimistic about its outlook in the face of soft consumer spending. let's get a quick check on the markets, take a look at u.s. equity futures at this hour. we do have a red arrow on the dow, looks like it would open

off about 14 points. nasdaq up about two points in the s&p 500 we'll call it off slightly marginally right now. >> you don't think friendly if you think activist investors. our guest host for the next hour has built his name, though being friendlier than most. you've never -- >> friendly guy. >> he's never taken a stake in me and asked me to do things differently. you seem friendly as a person. joining us now founder and ceo, and co-founder of partner and head of corporate advisory. cliff, i just -- we can talk about how you are friendly and maybe that worked better for you. you go in and maybe just do it a different way and maybe you work more closely with management. do they let you in because you're friendly? >> they do. for us it's about the quality of the conversation. we're looking for management teams that want to unlock value and our approach is absolutely friendly. >> would you ever call icahn friendly?

cranky i might call him. he's not really, right? it's different. >> yeah. i think that carl icahn would like to be friendly, sometimes he is, but i think often he's not. i think blue harbor's approach is different. >> so if you're rebuffed, then you find another situation. >> exactly. we're very clear with the board and the management team. if they want us as their partner and unlock the value, we're investing behind them. and if they don't, we're not. >> what percentage of boards say thanks so much for your call, good luck to you? and then you say, okay, good luck to you, i'm leaving now. >> we don't get that initially. most people are quite intrigued. what are the ideas we have to unlock value? why are we interested in their company? we have a disaarming approach. we tell them up front. if they don't want us as ha lead stockholder, we're not investing. >> we call them and meet with them many times before we buy stock. but then many times during our course of interactions, we conclude this isn't -- there isn't anything here. it's not as undervalued as we thought or the management value isn't our type of team.

and rather than pushing our agenda and forcing them to do something, we go back another company that really wants to win. >> i think that's your point. you said that would be a good line of questioning for you. there are companies that know they have a problem, right? and that's the first -- in any -- dealing with any problem, alcohol, whatever it is, you first have to realize there's a problem. some of these companies might actually benefit from the expertise of someone who knows how to do something. 15 years ago. it wasn't in the equity culture that existed then. today as cliff was saying there are a number of different kind of activist shareholders. there's tons of capital committed to that area with great returns generally, by the way. so now it's a very different thing. every company that we work with is either ready for a vocal activist shareholder or has one in their stock. it's a different world now. and it can be, actually, welcome. most companies are interested in hearing ideas.

>> what do you tell companies when they call you and say an activist stockholder has taken a position, whether it's a friendly act vivist or hostile activist. what do you tell companies? >> well, the first thing we do, tell them just to be ready. and we do this thing called the activist within. where, you know, we come in and sort of pretend we're the activist and get people ready to start thinking about by the way, some of the ideas may not be useful, some are. it just depends. getting ready is first. and second is to meet with shareholders. we almost always encourage that. >> peter, i would think, though, that you guys are the exception to the rule. you think activist investors -- and you probably still think the barbarians at the gate for a lot of guys. yes, you guys are a different breed but doesn't mean the hostile guys have gone away. >> that's true. and i think the friendly side of activism is -- which is the business that cliff's in is different. it's very different. >> so -- can we talk briefly

about the hostile side of activism? meaning, do we think or do you think that carl icahn bill ackman, i don't know if you want to put bill lobe in that category. we could name the list. good or bad for society? good or bad for the idea of long-term value? for example, what carl icahn wants to do at apple. is that a good or bad thing? i don't think carl knows a thing about the actual product or the technology. he -- it's a financial play, you know, one of the things i worry about. i think i looked at a company like ibm, actually. that's a company that hasn't had so many great quarters. i wouldn't be surprised if an activist shows up on their doorstep. they spend a lot of money on r & d. and all of a sudden if something like that were to happen, they slash the r & d budget. what does that company look like ten years from now? that's the antiactivist argument. >> right, but it's a little bit of both. it's great, i think, that tim cook met with carl icahn.

that's a good thing. i mean, it can't be a bad thing to have a ceo of a company like that meet with a shareholder. on the other hand, what does carl icahn know about what's going on within the four walls of apple. they're thinking 25, 30, 40, 50 years ahead. they're spending $4 billion or $5 billion on research every year. and it's not appropriate for them to say here's what we're doing, and here's why we can't give you the cash or here's how much cash we're going to give you necessarily. i think it's both sides of it. >> with p & g it worked, didn't it? >> this is -- this is all of a sudden -- maybe democracy is messy. maybe that's what the answer is. i put cliff in a different category. how do you feel about those guys? >> i think there's nothing wrong with hostile activism. i think it's a high-return strategy, as well. and if there's a board that's not doing the right thing and management team that's not working for stockholders and not optimizing their opportunity set. it's not something we would get involved in. but if a hostile activist has a new idea and better idea, not

all ideas are good or better, but if a hostile activist has an idea and not being responsive. i think it's perfectly fair game. and not all companies are doing the right thing. blue harbor's approach is different. we've decided we're going to back those management teams that we think want to win and we're on the same page. it comes from my background. there's nothing wrong with activism, it's a high-return strategy, as well. and there are companies out there that do need some pushing from external factors. >> cliff, when does friendly versus hostile activism work better? >> does one favor one approach to another. when you have a company that's trading at a big discount. and there are ideas to close that gap and the management not

coming up with ideas themselves, external party can bring that to the table, there's an opportunity to create, and it can be done friendly, less friendly, which is the approach of others. the fundamental. it only works, activist only works if there's a unique idea to close that gap. many companies are trading at fair value. many companies are not right for active investors. many management teams are doing everything themselves. so it's really a function of if finding those situations that are undervalued. >> can i change topic for one second? we have you for a little bit longer. deals, m & a, used to be my favorite topic. we don't have it as much anymore. this year on a global basis, we're looking at 2005 levels. what is happening? is this -- is it possible that this is secular? >> i hope not because this is the business we're in. and i actually think not. i think our view, andrew, on mergers going forward is that there are a bunch of different sectors where there's a lot of change going on. and when that change is coupled

with confidence or some level of certainty, that means a lot of activity. for example, the energy space, when you look at the u.s. energy revolution independence and the shale revolution, that we think portends for a lot of m & a activity. banks would be the other extreme where there's a huge amount of change but it's not coupled with certainty and effort at all. health care, we think will be quite active. so, you know, there have been all these old chestnuts, tons of cash, low rates, et cetera, et cetera. that's still the case. and we continue to believe that merger activity will pick up. >> is this going to be some kind of tipping point? >> what about confidence? andrew, you wrote in the "times" piece about confidence being the missing factor. is that what you think? is that what you're hearing? they're not confident in their own business that's why they're not making acquisitions? >> i think that's a lot of it. i think the confidence is weak and sometimes in the board room amongst shareholders within management teams, if you want to

question confidence, there's a long list of things that would push you in that direction. so absolutely. >> okay. great. cliff, you'll be with us. peter, thanks. >> thank you, peter. when we come back, the mismanagement of the obama care rollout is taking a toll on the president's approval rating. management expert bill george will join us right after this. and later, we have some breaking data on employment. we've got the weekly jobless claims due at 8:30 a.m. eastern. "squawk box" will be right back. and now "squawk horror stories" from the year 2025. >> congress votes to raise the hotel tax on wi-fi to $40 per night. >> blackberry discontinues keyboard phone models while touch screen phones have switched to complex 3d imagery technology leaving me no way to communicate with anybody. >> nbc's "today" show again wins the morning's rating award carried by charismatic new

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some of the country's top cfos have weighed in on health care costs, and we have the exclusive results from our cnbc global cfo council survey. 55% said that more than 10% of their expected health care cost increases this year are because of the new law. in fact, close to 60% said that paying penalties would be more cost effective than providing care. but they also realize that could make them less competitive when it comes to attracting talent. finally we asked for the personal view on the law. 60% say they oppose it. for more on the council, check out cfocouncil.cnbc.com. president obama's approval rating fell another five points to 42% according to the latest nbc "wall street journal" poll. and the troubled rollout of the affordable care act is partly to

blame. joining us right now is bill george, currently a professor of management practice at harvard business school and the chairman and ceo of medtronic. looking at this as a management expert. a, how would you grade it? and b, how would you fix it? >> i give it a "d" minus. the president and his whole staff treated this like a political issue. there's been no one in charge until very recently. and no one's tried management. and no one's thinking about the consumer, what was it like to go healthcare.gov and sign up? if you did, you'd realize what a fiasco it was. and even yesterday's appearance was emblematic of what the problem was. and working with them trying to figure out how to get it fixed and clearing away bureaucratic hurdles. there's so many hurdles that make it much more difficult to do this in government, this government than it would in private industry. >> what kind are you talking about? >> yeah. pardon? >> i'm sorry, what kind -- you mean versus private industry?

>> well, you can't hire the people you need. you can't get the subcontractors. you can't get the people to help you. fortunately, finally put somebody in charge this qssi, the health group subsidiary and they're the biggest insurer and manager of these kind of programs. they should have done this 3 1/2 years ago if they wanted to get on top of it. now they're in the middle of a fiasco because not only this problem but they're canceling all these insurance plans for people and people are going to be very upset they find they can't keep their doctors, they're going to be more upset. you're going to have to -- you're in realtime now, i think they have to bring in the professionals. that's why i'm recommending they bring in so many like george haverson. implemented a $2 billion system out there. one of the biggest in the country. bring in somebody who knows what they're doing. she's a politician, she's not experienced in these areas. >> you mean as a health care czar? >> i'd bring him as secretary of health and human services

myself. yes, i think -- that's what bush did, bush replaced the politicians with professionals like bob gates, the defense, and paulson at treasury. that's what you need in the second administration. otherwise, they're not going to go anywhere and this is going to be a black mark on the president's record, i think. >> kathleen sebelius testified yesterday she believes they'll be able to get the problems fixed by the end of november, november 30th, yo u think that' realistic? >> i think it's mission impossible. i heard them say this, this is a big technical problem, big management problem. you've got a lot of software to fix. they'll make progress. i think they're overpromising. they've been doing all along, overpromising and underdelivering and anyone working on it is put in a difficult mode. there's a tendency. she blames the contractors, now the insurance companies. this is a blame game. that's the political game. that's not going to solve the problem. >> bill -- >> this is going to require a team of people to solve it. >> if you effectively try to halt things, at least temporarily, do you think you

can ever rebuild the confidence in the american public to try this thing? >> yeah, that's tough, andrew. you're in realtime. what i would do is slow things down. they set the standard so high, i don't know if the law gives them flexibility to ease that out. i would push the data out from january 1. i don't think they're ready to force everyone. and i think this whole system is built around getting younger people to pay for the older. well, the younger for less than $100 can opt out of the system and i'm afraid all lot of them will opt out and you'll be left with the older, sicker people and no focus on staying healthy. that's my concern. >> you are the former medtronic head and there's been a lot said about the tax on medical devices that 2.3% tax, what do you feel about that? >> well, it's a tax on innovation. it makes no sense. it was a penalty, really, for the medical technology industry not coming to the party as the insurance companies and big pharma did. >> you mean not having better lobbyists. >> well, that could be it too.

and so i'd like to see it go away. i don't know, but i think the number one issue, now, becky, is getting this system fixed and i think we've got to have a whole change at how we approach. we've got to get pragmatic. the republicans have been saying eliminate. you're not going to eliminate, that's the law of the land, let's get it done. like any group of executives, get it done, get it fixed and put them in charge. and the president's got to stop playing politics or else it'll drag down the administration for years to come. >> jim parsons is one of our guest hostst today. >> in your view, is there some sort of drop dead date where we go beyond where there just is not enough signed up that the insurance companies start to back out and this thing goes into -- is there a date around which that -- is that december 30? where's the date where this thing will not work regardless? >> all right. if they don't slow this thing down, i think it could happen in the first quarter. that's why i'm advocating slowing it down. to give a little more time, to

buy some time to coach people, educate people. not just have mandates. i was glad they postponed the employer mandate. i think employer health care is a very good thing. the kind of plans worked at medtronic are eliminated. they had to cancel 150,000 people because they didn't meet the standards. >> won't the insurance companies get cold feet if they slow things down and start to exit? >> yes, i think -- i don't know if they can exit not having been on it. but the state plans are working much better. we have a state exchange in minnesota, it's working reasonably well. i think that's working much better. the key is, we've got to stop doing fee for service and get to pay for value. that's the key to the whole thing and get people healthy again. as long as we can do that, then the insurance companies are going to be concerned if the costs keep rising. >> bill, thank you very much for joining us today. pleasure talking to you. >> thanks, becky. coming up, a read on the employment recent jobless claims hit the tape at 8:30 a.m. eastern. ♪

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welcome back to "squawk box," everyone. in our headlines this morning, a chilling tale from your very own kitchen. listen to this. about 12% of spices that are brought into the united states are contaminated with insects, excrement and other filth. and this is according to an fda report released yesterday. nearly 7% of spice imports were contaminated with salmonella,

that is twice the contamination rate typically found in other types of imported food. other contaminants include human and animal hair decomposed parts, live and dead whole insects, staples, wood slivers and rubber bands. spice imports from mexico and india had the highest rates of contamination. yeah, hope you're enjoying your breakfast this morning. when we come back, the closely watched weekly jobless claims. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern.

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welcome back to "squawk box," happy halloween, and initial jobless claims for the week dropping a nice even 10,000 from 350 to 340. continuing claims, well, just a smidge higher from 2.85 to 2.88. it doesn't look to me as though that's going to get a big amount of market movement going. we're still probably in the digestive process of yesterday's statement. not that the changes were huge. but the response of the marketplace, at least the knee jerk was somewhat fascinating with price of treasuries going down along with stocks. the residual winner of the movement yesterday seems to be

the dollar index. seems to be attributed to less dovishness. i think it could also be attributed to the fact that there's a lot of crying foul with regard to the recent strength in the euro. maybe that has something to do with it. some articles on that topic in the journal today. gang at the desk, back to you. >> for more on the claims data, let's get to steve liesman, there's four pumpkins now. >> i'm so honored. >> well, you know, you have taken it to a new level. >> a lot of people who appear on the show don't get a pumpkin. >> isn't that nice? thank you. >> it's amazing how much it looks like -- >> looks like gorbachev. >> or ed asner. >> did you see the picture of me? >> you sent me, separated at birth. and he was -- he played along. >> he played along.

i'm not going to say what he said to say to joe kernan. >> he may be more left than you. he's a huge lib, of course. >> if you consider me, left, of course. >> but he's a huge -- >> left of you, i agree. >> anyway, congrats on your pumpkin. >> i'm honored. i'm honored. honestly, my 30 years in miss reporting career did not -- did not prepare me for this moment on television of how to react. it wasn't in journalism 101 or any of the economics training, how to react when you get a pumpkin. >> the golden globe. >> i do want to talk about the fed for a second and i want to go through the -- no, joe? >> no. just started doing something else. >> and you can at home too. now, did jim paulson in the last hour just said the fed doesn't matter. but if you think the fed does matter, here's the taper test. remember we talked about a three-part taper test and let's see which ones are met.

the first one is confidence in the economic outlook. funny thing's happened over the last quarter. we've ramped up growth, this is the macro economics tracking forecast, gdp is tracking 2.7%. unfortunately, the fourth quarter tracking 1.7%. built in some shutdown amount that we don't know about. there's uncertainty over that for the fed. job growth has been slowing at the adp, we're up at 190, now down to 130. i'd say the conditions not met. let's move on to number two here. and the second one is fiscal restraint. government funding debate in january, debt ceiling debate in february. i'd say conditions not met. 2 out of 3, we're not there yet. and then the final one, financial restraint, we have higher stock prices, we have lower yields. they removed yesterday a couple notes that said, you know what, we're concerned about it. looks like 25 basis points brought to you one of the three conditions of the fed tapering being met. now, the question you have to ask as an investor if you care about the fed, which jim paulson

does not. what is the timetable by which the other two conditions can be met? i don't think it's december. but there is a play on that people are talking about in the papers this morning. the ft, the "wall street journal," the december remains in play. >> they didn't take it out for sure, but they're not going to. it's data dependent, so we'll see. i think that was a given. >> but i think it was a physical thing, right. can the fed have confidence in the outlook given the data they're going to have in december? >> no way. >> you say no way. >> i don't think so. >> rick, i don't know if you want to weigh in on this. >> i'm not saying it's the right thing. i'm saying, i don't think they will. >> right. so what is the fed fund futures market telling us, rick? i know there was a ramp down in the outlook for interest rates in 2015. >> well, i really think that looking at fed fund futures at this point isn't going to garner you a huge amount of information. i think the real issue fed fund futures is the convergence. you know, you're not supposed to really look more than one meeting out because once you get

much more distant, it really is more of a function of how markets align arbitrage speculation, nothing wrong with any of those, but the reality is whether it's your dollar futures or fed fund futures, there's no more meeting until december. it shouldn't be shocking that the nearby contracts had massive adjustments. i don't really read a whole lot into it. >> i hear the word -- i hear that we're done. i just want to say there should be caution in the -- what we have for the outlook of the fed survey, which is qe throughout 2013 and taper in april. i think things are less certain than the market appears to be. we want to get back. a little bit of a last word. one, you have some stock picks for us. but also, do you care about all of this? do you care about tapering and what the fed is doing? >> i do care. but i'm not a trader, i'm a long-term investor. so i'm looking at making investments today that i'm going to hold for two or three years

where i'm buying them at a significant discount to intrinsic value and where the board is going to -- >> everything is inflated by the fed right now? >> i think the underlying economy is healing. i'm not going to make any predictions about the short-term gyrations in the market, but i think the long-term is pretty good and i've been investing for 30 years and never seen a large spread between the cash return on the market and the risk-free rate. of course i'm watching the near term fed and watching the gyrations in washington. but i think the prospect for stocks over the next two or three years is quite constructive. and importantly for blue harbor, we're only investing in those companies that are trading in a big discount and the board and management team are going to do something to unlock the value. >> give us picks real quick. >> i like a strong company accelerating in the web experience, video on the web. all of us using tablets and iphones to watch games, play games, watch videos and akamai

is touching that. this is a very strategic company. >> what price did you get into that stock? >> got in at 35, but happy to buy it at 45. this company is a really, really a rocket and the company's very well managed, has about $1 billion cash on its balance sheet. no debt. >> are you working with that management? >> met with them yesterday. strong relationship there, they're doing the right thing. management owns $250 million of stock which is rare to find. >> is that a company you decide you want to get on the board, for example? >> no, no. i think this is a very well managing governing company. >> okay. >> i think it's a company that is building value. >> okay. >> i also continue to like chicos, an exciting company, growing at square footage and debt-free company. >> you love. >> this is an interesting company. and i also like a company we have a large position called progressive waste, which is a waste company in canada, owns

landfills as well as collection and generates free cash flow. >> fas, you know what that is. >> chicos. >> what's the fas? >> it's fine arts -- >> no, folk art specialty. >> there you go. how do you know the company? >> i -- been around for 20 years. >> he likes the clothes. >> i like meaningless trivial useless information that never leaves my head. >> cliff, look to your left for a second. >> that's been there the entire time. >> that's why i was laughing. >> that's good. that's good. i should have worn a costume today. >> it's just funny. it's scary because you see like a guy like that walking around and you wonder, does that mean is it really there? and if it's not -- >> does anybody else see that? >> you're going to be fine, yeah. >> i'm waiting for warren buffett to come out from under there, right? >> from under the -- >> right. >> to undo his -- right. >> why don't you go over there by joe, there? >> move over to joe. >> yeah.

>> warren buffett. why is that? >> i don't know. happy halloween, warren. cliff robbins will be with us for the rest of the show. coming up on the squawk ceo call. liesman has learned. he doesn't even try anymore. a company that specializes in information solutions for the federal government including intelligence, cyber security and health care, the ceo of caci international. and now "squawk horror stories" from the year 2025. >> the "new york times" ships all employees to the last remaining section, sports. >> the gourdman administration outlaws the use of all fossil fuels despite the complete lack of evidence of manmade global warming. >> direct flights and competitive pricing and while airline seat sizes decrease by

10%, the average passenger girth has increased by a factor of five maximizing spillover. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

welcome back to "squawk box." it's time for our halloween edition of our "squawk" ceo call. it's a $3.7 billion information solutions company that caters primarily to the u.s. federal government ranging from the department of defense to the intelligence community to

civilian agencies. and joining us now in his first cnbc interview. this is your first time. >> first time. >> on halloween no less. kenneth asbury. of course, our guest host this morning, cliff robbins from blue harbor, owns 10% of caci. i have one question, we've been talking about health care all morning. >> certainly. >> could you fix this? >> could we fix health care? >> no, could you fix the website and all the technology behind this mess we're in? >> oh, to be honest, andrew. we don't -- reading the press clippings and that sort of thing, i don't think i know enough to give you an informed decision about it. >> but you do a lot of work for the government? >> we do, indeed. >> and a lot of back end work for the government the technology mind things? >> that is correct. >> when you look at a situation like that, what do you think? >> well, i think that health care in general is a great opportunity for caci and there's some really wonderful places that we're playing, particularly department -- veterans affairs

administration, we're doing some things with digitizing the ba back -- the old records. i'm an old veteran, got out of the military in '76, my records are in paper. we're turning those into digital documents now. so they're much more easy to do claims adjudication and that sort of thing. >> you own 10% of this company? >> we do. >> how did that happen? >> proud to do that. we got invested a few years ago. really because the company is growing so fast and really making the world a safer place. most of what caci is involved in is defense, cyber security, anti-terrorism. i like their mission and the company is just a cash machine. it has huge cash flow. since we've been involved, the management team and the board bought back almost a third of the company. it's been a great investment for us. and the company is really poised for future growth. the things they're going in health care, cyber security, anti-terrorism, sadly this is the dangerous world and they're making a world a safer place. >> does all -- does the debate around the nsa and all of the

things that they're doing slow down your business? >> no, i wouldn't say it slows it down, it takes a business that's normally not been discussed in the public and it puts it in a public context. and so it makes it a little bit more difficult for the policy makers, i think, that are talking about it. our business is focused on the development of the capabilities associated with it. the difference is -- the wonderful thing about being in the united states, we're very creative, very inventive, we've invented a lot of these technologies that have dual purpose. we can use them to look at adversaries and use them to look at our own -- >> tell us about the technologies. >> well, let's just take cyber, for example. a lot of what we do is computer network defense. there are other parts of our business that might look at somebody else's computer network and look at it from an offensive capability. >> let me ask you this. i know, cliff, when you get involved it's because management wants you to come in.

you know what you're talking about with all of things you guys do. what did you see as an opportunity? >> we got invested in this company, started looking at the company, frankly, it had been using its free cash flow, which is so significant. they've been -- they were established and running their business and growing their business and we've got unique ideas about the capital structure and the stock made a new high yesterday. they built tremendous value by using their free cash flow to make acquisitions. also to return cash to stockholders. and as i mentioned before, they bought back a third of the company since we've been involved. and that's supercharged the value of the equity that's behind. we were able to work with them and making the capital structure much more efficient. at the same time, they'd been growing their business, making acquisitions and, you know, companies doing excellent job operating even in this more difficult environment. >> i have a management question. this relates to edward snowden and being a contractor for the government. 17% of your employees have some

kind of security clearance. >> that's correct. >> that's correct? okay. so what is the lesson of edward snowden in terms of being able to track your employees to make sure there's not more like that if that's -- i mean, there's some people who think he's a hero. i don't want to suggest anything. but given your role as a government contractor of trying to avoid that. and how do you think the government's going to change its relationship with contractors as a result? >> well, a lot of questions there. let me start with this premise. i got my first security clearance when i was 18 years old. i had joined the military, i was in military intelligence. and as a result of that, i signed a document that said i would not disclose the items that i came about. somebody chose -- mr. snowden chose to disclose that and as a consequence, we're in the dialogue that we are in today. our -- the government has been buying services from the private industry since the first world war. there's millions of people with

security clearances as part of what it takes to run our government from a national security intelligence or any other side. i think that will continue. is it a proper dialogue to have about -- what criteria that you use in order to judge it? yes, i think there is. but i think that we get past that ultimately and we -- >> right. >> the world is not a safe place. the united states is -- needs to posture itself in the position where it's going to protect itself. i think it could -- >> is the debate around whether we should outsource some of the functions to a firm like yours or insource them by trying to make these people -- does that matter to the national security of the country? >> i think it does in some cases, andrew. i think if you have a short-term need that you don't want to invest in a federal employee or government employee where you're going to have them for a 30-year career, then i think it makes sense to go. i think it makes economic sense to go to industry to do it. another way to think about it, you might go there because there

are very specialized skills. such as the kind of skills we bought in the most recent acquisition that we just -- >> and so just real quick, you're going to be pursuing more deals we should expect. >> in the near term, we're going to be delivering our balance sheet to pay for the one we have now and make sure we integrate it and get the absolute value added. but over the long-term, we'll be looking at other deals in the high-growth markets. >> thanks for coming in this morning. >> thank you. >> cliff, thank you. >> thank you. coming up, more from our guest host cliff robbins. plus stocks on the move in the premarket with jim cramer. [ bagpipes and drums playing over ]

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♪ i want out >> let's get down to the new york stock exchange. jim cramer joins us right now. jim, "mad money" last night, you warned viewers they shouldn't get sucked in which the head fakes of the market. what's going to happen after

people start to digest the news from the fed? >> there's this weird kind of -- everything's going to be a little bit soft so we know the fed won't do anything. when the fed tells us things are a little soft, people panic and they sell. usually lasts a couple of days. facebook and starbucks, people are taking a more jaundiced eye toward everything. >> what do you think about facebook, the idea that some of the younger teens aren't spending as much time on it, under the idea that they maybe can't expand under the ads on the feed? >> when ever up hear the analyst say "i hate to be the dead horse," you know they've reached the point where they couldn't put any more ads in or people would get turned off, something zuckerberg said would never happen. there's a lot of people feel that just like the last quarter when they said it's about to take off, this quarter it's

already peaked and something's in between. >> exxon mobil looks like it will close a little higher than where it closed yesterday. they did warn how there were significantly weaker refining margins because of all the increased capacity that's out there. go ahead. >> refining margins have been a problem. that's why a lot of people decide to spin off the refining operations. i come back to it's noble, it's anandarco and pioneer. those are the equivalent of celgene, regeneron and it's the equivalent of buying pfizer and merck. >> when we come back, we'll give our guest hosts the last word when "squawk box" on this halloween day returns. >> tomorrow on "squawk box," one

hour with charles plosser. starts tomorrow at 6:00 a.m. eastern. ♪

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could ask for more ♪ let's get back to our guest host today, cliff robbins and jim paulsen for the last word. in terms of what the fed sees, the economy isn't moving along as quickly. i think money velocity is going to turn up next year, right at a time when a dovish perceived fed is coming in, when the dollar is weak, when commodity prices are bottoming out, unemployment dropping to 6. the whole conversation in this country is going to change, particularly for the fed. i think initially positive, maybe negative later in the year. >> yesterday our guest host was ted langone. he said companies have gotten better and better and more efficient and if we see an

increase in gdp, these companies are primed to take off. would you agree? >> i agree. i think the economy is healing and companies are more efficient. the next three mngs are interesting to watch. if fear grips the market, which i hope it doesn't it, would be a huge buying opportunity. we would be stepping in if the market gives us the opportunity. i hope they don't. i also really applaud these buyers and management teams willing to listen to their stockholders. >> we have undone the fed's good work in terms of getting ready for the taper. would you think, either of you, there would be a dislocation when the fed steps in and says it's time? >> i don't think so. it will be gradual. the fed has done a good job telegraphing what it ultimately will do. i think the gyrations i'm talking about have less to do with the tapering, more with the

dysfunction in washington that's pretty polarized down there and i think we're going to have sort of a replay in january and february of what we've had more recently. >> jim, ten seconds. >> i think when the fed does taper, the economy will be good enough to deal with it. >> thanks, guys. happy halloween, everybody. be sure to join us tomorrow. "squawk on the street" begins right now. happy halloween is right. good morning. welcome to street treat. i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. we have a revenue miss at visa, a rough conference call, a fed statement that some are calling surprisingly hawkish. we have a big show today packed with that and more. the 10-year yield is right ou